Posted
by
Unknown Lamer
on Thursday May 16, 2013 @09:51AM
from the fred-chang-doesn't-mess-around dept.

Newegg's policy of not backing down from patent trolls, even ones as large as Alcatel-Lucent, continues to result in victory. Earlier this year, Overstock and Newegg successfully defended themselves with a jury invalidating Alcatel-Lucent's main patent used to force companies as large as Amazon to settle. Naturally, Alcatel-Lucent appealed, but the appeals court quickly ruled in favor of Newegg and Overstock.com. From Ars: "Federal Circuit judges typically take months, and occasionally years, to review the patent appeals that come before them. Briefs in this case were submitted last year, and oral arguments were held last Friday, May 10. The three-judge panel upheld Newegg's win (PDF), without comment — in just three days. ... Alcatel-Lucent dropped the case over its other two patents, desperate to get back the '131 patent that Newegg and Overstock had killed at trial. 'If they had been able to revive this patent, the litigation machine would have continued on,' Reines told Reuters after the win."

The patentability of software only applies when it is run on a computer.

Software isn't being patented in "software" patents. Vague ideas and idioms are patented. Pinching the screen to zoom isn't a software patent. If it was a software patent the patent should be on exactly how the software accomplishes the effect, on the implementation. If my implementation accomplishes the effect differently it wouldn't infringe your patent. The implementation is the code. The code is copyrighted. A real software patent would be redundant. The way it works now is the equivalent of inventing a special kind of drill bit and getting a patent on anything that makes holes. That's how software patents work now.

Exactly. That is what everyone who rails that "software is just math" completely misses. It's not the implementation in software that is eligible for patent protection, it's the idea/process that the software is an implementation of that is eligible for patent protection.

Processes are patentable. Ideas aren't, but a specific idea that is implemented as a process may be patentable. It's still not the software that is being patented, it's the implementation of a specific method/process, not the math involved.

Claiming that software is just math, therefore, nothing written is software can be patented is an absurd claim. All machines are "just engineering" in their implementation, and engineering is just math, therefore, no object would ever be patentable using that absurd logic

If it wasn't for the graft and greed or incompetence of the employees of the patent office, they never would have.

And since the US has set themselves up to be an economy highly dependent on patents and copyright, I seriously doubt you'll see these patents repealed.

The people lobbying for expanded IP rights don't want patents lessened, and they're not going to allow the politicians to take away their meal ticket.

When Microsoft makes more revenue from Android licenses (for patents I'm not convinced they've ever disclosed) than they do on their own OS, nobody is going to allow patents to stop being so widespread.

At this point, all of the "too big to fail" companies are so dependent on this as to make it inseparable from their core business.

When Microsoft makes more revenue from Android licenses (for patents I'm not convinced they've ever disclosed) than they do on their own OS, nobody is going to allow patents to stop being so widespread.

I doubt Microsoft makes more from Android then Windows. Since the agreements have all been confidential, you don't know, either. As for the patents, they've been listed before. Yes, they're pretty shitty, but that's par for the course and doesn't mean they'll lose in court.

Software patents are actually defined in terms of a physical object, the medium on which it's stored. They often include magic phrases like "a computer readable memory device having stored thereon a computer program".

IMHO, the problem isn't with the physicalness of the invention. After all, in the end it's really the insight and effort that you're trying to reward. The problem, I believe, is that the USPTO has done a terrible job of encouraging insight and effort by granting vague and obvious patents which

Method and process patents are actually very important in certain contexts, such as the pharmaceutical industry. Some countries, such as India protect the process patents much stricter than the patents for the substances themselves. For instance, to take a historical example, the process to create aluminum was revolutionary and made aluminum a much cheaper product. Instead of trying to patent all of the various ways that someone can implement the process, which can be very difficult, it is appropriate to pa

While I grant that, this is only what process patents claim to do, not what they do. And obviousness is rarely considered in a reasonable way. It's supposed to be "obvious to those skilled in the art", whereas it is rendered as obvious to the most bigoted member or the jury or to the least appropriately skilled individual in the room. (Well, I exaggerate a little, but it frequently seems only a very little.)

The actual implementation is so bad that all process patents currently existing should be deleted,

"Evidence at trial showed Alcatel's patent application to the U.S. Patent Office (USPTO) that resulted in the issuance of the '131 patent was faulty because the claimed invention was both anticipated and rendered obvious by technologies from the 1980's that preceded Alcatel's patent application by years." source [bracewellgiuliani.com]

Only 1980's? I'd be surprised if substantial part of that, at the least, didn't go back to Doug Engelbart's On-Line System demo in 1968.:-) That was a veritable treasure trove, that one.

Generally, when invalidating a patent, you go for the most recent prior art that's still "prior" to the priority date of the patent - there's less wiggle room when you say "this was done 6 months earlier by X" as opposed to "this was done 20 years previously by Y", because with the latter, they can respond "if so, how come no one exploited it for 20 years?"

I'd like to see that. If the SCO trial has shown something it's that you don't go up against the Nazgul with dubious claims. IBM will never back down. They probably spent much more on trial than SCO was offering to settle.

Actually, IBM, like most big companies, will pick-and-choose its fights. But yes, they're clearly willing to spend far more than it costs to settle in order to discourage trolls and frivolous suits. If they didn't, they'd be nibbled to death. But it's far more cost-effective for them to do so only to a certain percentage of litigants.

Of course, SCO made several missteps right off the bat that made them an easy candidate to choose for fighting back. IBM had already invested at least a billion in Linux by the

Yes, I know there were links to entire other articles. Including ones I knew would have mention of the patent, and likely a link to THE patent. But I was lazy today, and this story wasn't that intriguing for me.

So I just wanted to know what they were actually being sued for. I figured they had 2-3 paragraphs they could have simply mentioned "Patent involving....2-3 words"

"The invention is directed to a communications protocol which facilitates the exchange of interface information between a host processor and a terminal, such as a workstation, smart phone, portable computer, etc.,"

"Successful defendants have their litigation managed by people who care," said Cheng. "For me, it's easy. I believe in Newegg, I care about Newegg. Alcatel Lucent, meanwhile, they drag out some random VP—who happens to be a decorated Navy veteran, who happens to be handsome and has a beautiful wife and kids—but the guy didn't know what patents were being asserted. What a joke.

All 27,000 of them? (The article, and those before, give the three patents in question.)

Rather a sad end, all those years of Bell Lab's work, now in the hands of a legal department, doing no real good for anyone. (I don't consider feeding some lawyers' bank accounts quite qualifies as doing real good.) If memory serves, Bell Labs was the exemplar for doing pure and applied research on a large scale, and never really equaled elsewhere.

It it truly amazing how stupid people are when it comes to investing in, respecting, and keeping Basic Research free from market pressures and profits. How many countless breakthroughs and completely new markets have been created by some free thinkers who were allowed to do just that? But from an idiot congress critter chairman on the House 'science' committee to the scourge of humanity (anyone with an MBA), they all see basic research as a waste of time and money.

Yep. I was a contractor there during the dot-com bust. Watched their stock drop like a stone overnight. For the company that essentially invented cellular service, the company that managed to build a global telecommunications infrastructure, and invent Unix and C on the side - it was truly sad to see what the corporate raiders did to them.

BTW, on a sad note, does anyone remember when Lucent actually innovated stuff? The legitimate heir of Western Electric and Bell Labs has fallen very far.

Do you mean like this? Light Radio [cnn.com], a programmable cell tower the size of your palm?

While true it has been a while since the hey day of Bell Labs coming out with new tech every few years, they don't seem dead just yet. I blame their current state on chasing quarterly or yearly profits and having a somewhat unfair playing field with companies like Huawei and ZTE instead of investing in the long term tech.

Per wikipedia

On August 28, 2008, Alcatel-Lucent announced it was pulling out of basic science, material physics, and semiconductor research, and it will instead focus on more immediately marketable areas, including networking, high-speed electronics, wireless networks, nanotechnology and software.

That and their merger with Alcatel hasn't been very smooth. Though too, perhaps the wireless tech is maturing so there is not the low hanging fruit anymore?

Also for clarification Bell Labs is still around in at least some form, it is the research arm of Alcatel-Lucent. Lucent merged with Alcatel back in 2006.

I've been on both sides of that same street. Newegg failed to deliver on time - they refunded my shipping. Amazon failed to deliver on time, they refunded my shipping. But, both have delivered on time, as well.

And, neither can take credit or blame. No matter which shipper they use, that shipper usually hands off the package to the USPS. It seems to depend on exactly WHERE they hand it off to the USPS, whether my package will arrive in tim

No - I actually expect it to stop in Texarkana for fifteen minutes, to toss off the six to twelve bags that are tagged for the ArkLaTex area. They USED TO do exactly that. FedEx STILL does that. UPS does the same. Which means, if FedEx or UPS carries my package to Texarkana then delivers it to me directly, it's an on time shipment. If FedEx or UPS carries the package to Texarkana, then hands it off to the USPS, it's an on time shipment. If ANYONE hands off the package to the USPS before arrival at Tex

If ANYONE hands off the package to the USPS before arrival at Texarkana, the shipment is going to be one to three days late.

Ditto here. I'm giving up on the free shipping from now on, so long as I can pick my shipper. I don't want SmartPost (which is an oxymoron). In theory, it should work well (USPS already goes by every house every weekday... let them handle local delivery), but I have yet to see it work in practice. It's significantly slower every time, much more difficult to track, and I've had multiple packages get returned simply because they didn't actually drop it off when they were here (and I was home, and signed the c

This much is true. Prior to the breakup in 1984, AT&T was a government sanctioned monopoly [wikipedia.org], permitted largely because telephones prior to the monopoly were balkanized in little, regional switching systems that often couldn't communicate with each other, making cross-continent communications unreliable (modern analogy: you can't call your friends on Sprint from your Verizon phone).

In return for being permitted to operate as a monopoly, AT&T was limited in the way it could distribute its profits,

How did they end up owning this patent? Alcatel-Lucent is not on the original patent. Also, now that the patent has been thrown out, what changes in here [google.com]? I can't find anything in there showing its updated status.

A patent is property. That is why companies give bonuses to engineers that come up with patentable ideas. Only people can be awarded patents, and for the company to then take ownership, they have to pay for them.

How did they end up owning this patent? Alcatel-Lucent is not on the original patent.

Patents are property that can be bought and sold. Whoever has ownership of the patent has the power to enforce it by taking infringers [wikipedia.org] to court, even if the owner had nothing to do with inventing the patented invention.

Also, now that the patent has been thrown out, what changes in here [google.com]? I can't find anything in there showing its updated status.

That link goes to a google page (i.e., absolutely unofficial), and maybe nothing will change. The Patent Office may not get around to updating the patent on record, either. But barring a successful appeal to the Supreme Court, the patent is unenforceable. Alcatel-Lucent therefore cannot u

THIS is why I give my business to companies like NewEgg, and have and will NEVER buy a single damn thing from ones like Amazon.

Amazon settled because it is also a patent troll. Blood runs thicker than water, especially between patent trolls.

Amazon are not pure patent trolls or they would not have been sued. They actually use their technologies. I'm not saying they are squeaky clean, I certainly didn't like their 1 click patent [wikipedia.org], but they are not a complete troll.

THIS is why I give my business to companies like NewEgg, and have and will NEVER buy a single damn thing from ones like Amazon.

Amazon settled because it is also a patent troll. Blood runs thicker than water, especially between patent trolls.

Amazon are not pure patent trolls or they would not have been sued. They actually use their technologies. I'm not saying they are squeaky clean, I certainly didn't like their 1 click patent [wikipedia.org], but they are not a complete troll.

Indeed, the genius of the pure patent troll company is that I can never be attacked in the same way it attacks. Since the troll company doesn't produce any useful products or services, there's no activity it does which could be considered for patent infringement, at least until one of them is granted a patent on enforcing patents as a business method.

Big corporations wield large portfolios of patents as weapons all the time, suing and countersuing each other when it looks like that action will help profits. While this is a very damaging abuse of the patent system, it's quite different from the type of trolling described in TFA. Also, the fact that Amazon chose to settle has little to do with how that company may have abused their patents in the past. They made a decision calculated to be best for their bottom line, whether that was a correct decision or not.

As a customer, I think it's a mistake to make broad buying decisions based solely on one aspect such as the suits described in TFA. I've been a customer of NewEgg for years because they have good prices and service and now I have yet another reason to use and recommend them. I've also been a customer of Amazon, especially of their music store which has long provided downloads unencumbered by DRM, proprietary formats or requirements to use specific client software. OTOH, I'd never use Amazon's Kindle system with its very restrictive DRM and other lock-in mechanisms.

LMOL ummm no, business makes a cost benefit analysis decision. What's the cost of going to trial versus settling? In many cases, patent trolls set the price below the cost of a trial, so businesses settle. It's all about numbers. Few companies make principled stands. Principles are great but often don't generate revenue.

What is needed is patent reform. Make it harder for a company to bring frivolous lawsuits. Make them show you the infringement, not simply say, you infringe because we have a milli

I'm sure these companies already factored this in to the decisions they made, but it isn't just about the cost of going to trial for this one thing vs settling out of court for this one thing. You also have to factor in how many fewer patent trolls may try to entice you to settle out of court if you demonstrate that you will call their bluff and take them to court (or how many more patent trolls may come knocking when they see what easy pickings you are).

I'd also make the patent troll produce something from that patent - shit or get off the pot. If you are not using the patent, then you have no right in retaining it or using it against someone.

Actually, this is one point I'd disagree with.

If the inventor of the patent chooses to make their own widgets, are they really making their own, or are they contracting with a Chinese factory to produce them under license? Do you require the inventor to stand on the factory line and hand-assemble each and every patented widget personally? That quickly gets silly.

So the inventor can choose to make widgets themselves, they can license the ability to make widgets to other people, or they can cash out and sel

There's something creepy when Newegg now sends me emails about 30% off rice cookers. Not sure if they have to deversify as the PC market (um, matures?), or they want to go head to head with said Amazon.

The patent office should have to pay the legal fees of the winning side every time a patent is defeated in court.

The patent office are the gate keepers. They are currently enabling all the patent shakedowns.

For proper control every system needs proper negative feedback. If the patent office gets money for granting patents and does not lose money for granting bogus patents they are going to grant everything under the sun to encourage more applications and more incoming money.Only by penalizing the patent office for improper patent granting will there be a proper measure of control.

Maybe not only the patent office, but both the company that filed or bought the patent should get to pay. Not just the legal fees, but a penalty on top. That should make people consider more carefully when they buy or file a patent.

Maybe not only the patent office, but both the company that filed or bought the patent should get to pay. Not just the legal fees, but a penalty on top. That should make people consider more carefully when they buy or file a patent.

Forget fining the patent office -- all that will do is reduce the funding available for patent examiners to do their jobs causing the reverse effect of letting more bad patents slip through. But a fine on the patent holder for certain kinds of invalidations sounds good to me. It is my understanding that it is the patent filer's responsibility to seek out prior art as part of the application process. If a patent is invalidated for what is essentially failure to follow the filing process correctly then I think a big fine is appropriate.

What we do not want is to turn the system into one where a big company can simply out-lawyer a small patent holder and then add insult to injury by forcing them to pay a fine too. That increased risk would discourage little guys with validly patentable inventions from filing in the first place (or force them to settle out of the court on poor terms).

The SHIELD Act [arstechnica.com] was introduced by Reps. Jason Chaffetz (R-UT) and Peter DeFazio (D-OR) on February 27, 2013.

It creates a "loser pays" system for certain types of lawsuits, in which do-nothing patent holders will be forced to pay the defendant's legal bills if they lose their lawsuit. However, losing defendants won't have to pay, so it's more like a "losing plaintiff pays" system.

Sorry, but this is probably the dumbest idea I've heard in a long time. The do realize the US patent office is a part of the federal government, right? You further realize that the federal government's sole source of revenue is taxes, correct? Do you realize that you are espousing that we, as the taxpayers, pay the litigation costs for a company winning a patent battle against a bogus patent?

And reduce the funding to pay for more patent examiners? So the worse they do, the worse they get. Beatings will continue until morale improves.

Some internal controls are warranted. (If n of your patents gets invalidated, you're canned and we hire somebody better to take your place.) Taking money from the gatekeeper so that he can guard the gates better isn't the way.

The US PTO gets a great deal of positive feedback from granting patents. That feedback loop has spun out of control. At this point, A little negative feedback may help, but it's probably too late to keep this mechanism from consuming us all. There are just too many crappy patents.
But, I feel there is still some value in documenting this train wreck. There may be a few survivors. Or maybe someday, the children of Patent Trolls may wish to do something else. Plus, there may be isolated nations that wish to

The best way to deal with a playground bully is to punch him in the face. Even if he has his buddies with him. Even if you'll get disciplined by the school. You do that a few times, and no one will mess with you.

The same principle applies to patent trolls: Always fight if you can at all manage it.

Oh, I lost the fights I got into, although nowhere near as badly as you did. But you know what? It still worked, because bullies are basing their decisions about who to go after on the odds that something bad will happen to them, and I hurt them enough that it qualified as something bad.

That's why the lawyer quoted in the article was lamenting not being able to move forward with his appeals - he keeps winning at lower levels, and the other companies drop the lawsuits because they don't want a precedent set.

Maybe not a 'legal' precedent, but most certainly a 'social' precedent.

It tells everyone that the trolls can be taken down. Notice how the trolls are backing off of Newegg. The trolls know Newegg will fight back. The trolls know that Newegg will take out their best moneymakers. Better to go pick on somebody that won't put up a fight. Well, when the rest of the playground sees that the bully will back down if you punch him in the nose, the bully's control is greatly curtailed.

i wanted to scan the opinion, but there is none. and the decision says nonprecedential.

not a lawyer but it seems this decision cannot set a legal precedent for future cases

There was no precedent to be set here. Basically, the appeal was Alcatel trying to get its favorite patent un-invalidated, and the the judges looked at the case and are basically telling Alcatel "There's nothing wrong with the lower court's decisions - it stays invalidated. Now go away and quit bothering us".

Newegg might be smaller than Lucent, but they are still not a Mon 'n' Pop. I know that in the corporate mind anything under a thousand employees is "small business" but, face it, Newegg is not small business.

The real tragedy with patent trolls is that the *real* small business can not fight them. They can shut down a business writing innovative software with 2-3 employees just like that.

Good for Newegg, but treating it like a David vs. Goliath win is not too smart.

were I in a small business facing this kind of situation I might see if Mr. Cheng is interested in moonlighting so he can try out those strategies he's been working up. Worst case you're in the same boat as before, best case the troll gets flattened, middling case the troll runs away:)

Amazon gets nothing back. They entered an agreement to license the patent, irrespective of whether or not the patent was valid. That's why patent trolling works - no risk of a negative outcome (a zero outcome is still possible).

Same thing happened to Research in Motion. They were sued by NTP for patent infringement. After RIM lost the court cases and the SCotUS turned down their appeal, they were backed into a corner and forced to settle with NTP for $600+ million. Then the USPTO decided to review the patents and invalidated some of them. (They're still in the process of being reviewed AFAIK. The courts have put NTP's lawsuits against other wireless companies on hold until the review is completed. Fat lot of good that does RIM. We'll always wonder if they would have fallen as badly as they did if they had had $600 million extra to put into R&D back in 2006.)

What happens with the settlements that Amazon and others made over this patent? Can that money be clawed back?

Depends on the terms of the settlement agreement. Frequently, there will be a clause that says that future royalty payments are terminated if the patents are invalidated. Rarely - as in almost never - there might be a provision to return some past payments. And similarly rarely, there are contracts where royalty payments continue even if the patent is invalidated.
The settlement is just a contract - whatever you agree to in that contract is what happens.

From what I know -I've met some people there- Alcatel has some very serious development - and a lot of experience with being ripped of by chinese copycats. Not what you associate with patent trolls. So I'm a bit surprised by the wording in the article.Then again. I don't know Lucent.

Force is a euphemism for blackmail, and it's not inaccurate when applied here. "Nice web site you got here, it'd be a shame if we had a court order you to take it down. Give us $100,000 and nothing bad will happen to it, or you risk losing a $100,000,000 in court if we win." That's force to a company that doesn't have $100,000,000 in their bank account.

Newegg's made a corporate decision that said "we don't care if it's a thousand times cheaper to settle than to risk losing a lawsuit. We have a very large pile of money, and we have promised to call every single bluff presented to us. We will never fold our hand."

Actually, their view is somewhat more long-sighted than that. "We know settling this one patent would be cheaper than fighting, but settling would encourage a flood of other patent trolls to try and that would be more expensive."